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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Centene Corporation (XNYS:CNC) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
CNC
Name:
CENTENE CORPORATION (XNYS:CNC)
Sector:
909.00M
Industry:
Healthcare Plans
CEO:
Mr. Michael Neidorff
Total Employees:
72,500
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -152.36% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF CENTENE CORPORATION(CNC) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND HEALTHCARE PLANS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
90.05
One Month Price Target:
$90.31
Six Month Price Target :
$91.6
Likely Price in One Year's Time:
Ticker:
$93.16
Likely Trading Range Today Under (Normal Volatility)
$89.74
Price Upper limit ($) :
$90.53
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$85.39
This week:
$79.64
This month :
$69.22
Other Primary facts
Market Cap:
50.49B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
571.58M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
15.6%
-15.01%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$111.65
$101.64
$68.45
$78.46
Medium risk (<10%) entry points
Buy Call
Sell Call
$98.38
Buy Put:
Sell Put:
$96.24
$81.70
$83.86
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
CNC
Sharpe Ratio:
3.37%
Comparison:
CNC, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is -14.67% lower than the industry
& ratio is 47.64% higher than the market/S&P 500 average
Average Returns/Yield of
CNC
Daily returns:
0.10%
Weekly returns:
0.48%
Monthly returns:
1.90%
Yearly returns:
24.40%
Comparison of returns:
Average annual returns/yield (last 3 years) is -6.41% below industry average
Classification:
CNC, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.99
Statistical test of Returns:
CNC has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.56%
Weekly Volatility:
5.73%
Monthly Volatility:
11.47%
Yearly Volatility:
39.73%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.48%
Volatility in last five trading days has been -42.44% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.17%
Weekly VaR:
-11.57%
Monthly VaR:
-23.13%
How Much Can the price of
CNC
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-19%
Worst case (decline):
-80.12%
This translates to price declining to:
$72.62
This translates to price declining to:
$17.90
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
CNC is a 63.25% riskier investment compared to the market/S&P 500 & is 39.86% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 10.21% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
CNC
Beta in relation to market/S&P 500--0.51
Expected beta in 1 year's time:
0.635
Expected beta in 3 year's time:
0.898
Unlevered (debt free) Beta:
0.321
Beta in relation to Nasdaq (XNAS):
0.655
Beta in relation to all global stocks::
0.885
Beta Comparison & Analysis
Beta of competitors/peers::
0.848
Beta is -39.41% lower than peers
Average Industry Beta:
0.719
Beta is -28.58% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
5.08%
Sustainable growth rate is -65.28% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.162
Alpha is -0.95% below industry average alpha yield
Alpha is 1029% higher than market/& is unsustainably high
Analysis of Cost of Capital of
CNC
Equity cost of capital:
0.067
Equity cost of capital is -17.43% below industry mean WACC
Unlevered (without debt) cost of capital:
4.16%
Before-tax cost of debt:
2.89%
After-tax cost of debt:
2.28%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.28%
WACC is -18.66% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$233.01
Revenue growth rate per share of (3Y):
1.88
Annual revenue growth rate is -43.78% below industry average
EPS:
$2.52
Expected Annual growth rate of EPS (3Y):
-10.59%
Expected future EPS growth rate is -202.41% lower than the Healthcare Plans industry
Free cash flow (FCF) per share:
$7.32
-
-
Debt per share
$38.78
EBITDA per share
$7.32
Valuation Analysis Today of
CNC
P/E Ratio:
28.64
P/E Ratio of Competitors/Peers:
41.66
P/E ratio is -31.25% lower than main peers & is 30.39% higher than the industry
Stock price/value with industry average P/E ratio: $55.36
CNC is 62.67% overvalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
0.39
Price to sales ratio is -50.27% below the industry mean
P/B (Price to book value ratio):
1.88
Price to free cash flow: 12.31
Price to free cash flow ratio is -19.72% lower than the industry
Net income growth rate (3Y):
0.21%
Net income growth rate is -100.26% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
81.59%
Net debt to equity ratio:
42.08%
Debt to assets ratio:
26.74%
Net debt to assets ratio:
13.79%
Debt-to-asset ratio is -58.58% below industry average
Ability to repay debt:
Interest coverage ratio:
6.39
Interest coverage ratio is 116.22% more than industry average
Looking forward:
Debt growth rate:
2.84%
Annual debt growth is -99% lower than industry average debt growth rate
Debt repayment rate in last quarter: 2.43%
Analysis of Key Statistics
Correlation of price movement with the market:
0.577
Statistical significance of correlation:
CNC has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.624
Stock price is -7.52% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.624
Correlation of price movement with Nasdaq (^IXIC):
0.016
Covariance of price movement with the market:
0.024
Kurtosis
5.94
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.359
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
CNC
Gross Profit Margin Ratio:
45%
Operating Profit Margin Ratio:
1.49%
Operating profit margin is -150.23% lower than the industry
Net Profit Margin Ratio:
45%
Effective Tax Rate:
26.19%
Effective tax rate is 57.34% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
5.51%
Return on equity (ROE) is -164.37% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
1.81%
Return on assets (ROA) is -146.80% lower than the industry
Financial Leverage:
1.4x
Current Ratio:
1.05
Current ratio is -36.70% below industry average
Cash Conversion Cycle (days):
0
-
The remaining useful life of property plant & equipment is: 1.8 years
Stock based compensation to net income ratio:
4.68%
In-depth Efficiency Analysis
Revenue generated per employee:
1.8M
Each employee generates 22% more revenue than industry average revenue per employee
EBITDA generated per employee:
57.7K
Each employee generates -26% less EBITDA than industry average revenue per employee
Profit generated per employee:
20.6K
Each employee generates -51% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
12.5K
Each employee generates -9% less free cash flow than industry average revenue per employee
Assets/Capital per employee
714.4K
Each employee generates -9% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
CNC
AGILENT TECHNOLOGIES, INC. (XNYS:A)
BAXTER INTERNATIONAL INC. (XNYS:BAX)
Takeda Pharmaceutical Company Limited (XNYS:TAK)
IQVIA HOLDINGS INC (XNYS:IQV)
Alcon Inc. (XNYS:ALC)
MCKESSON CORPORATION (XNYS:MCK)
VEEVA SYSTEMS INC. (XNYS:VEEV)
METTLER-TOLEDO INTERNATIONAL INC. (XNYS:MTD)
RESMED INC. (XNYS:RMD)
Current Analyst Ratings
Strong buy�21%
Buy�29%
Hold�21%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
133.18B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
118.25B
14.94B
-
10.54B
10.54B
-
930.00M
11.47B
-
655.00M
1.51B
4.19B
1.98B
1.50B
2.02B
529.00M
1.50B
Statement of Cash Flow
Date:
Period:
390.00M
Differed Income Tax :
12.00M
Stock Based Compensation :
70.00M
Change in Working Capital :
- 192000.00K
Accounts Receivables:
- 3099000.00K
Other Working Capital:
81.00M
Other Non-Cash Items:
19.00M
Net Cash Provided by Operating Activities:
1.15B
Investments in PP&E:
-
Net Acquisitions:
- 1504000.00K
Purchases of Investments:
- 1700000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
11.24B
1.67B
12.91B
16.17B
-
2.04B
31.11B
7.07B
20.90B
8.14B
14.13B
-
1.55B
51.79B
-
82.90B
9.77B
502.00M
-
526.00M
18.89B
29.69B
22.17B
2.44B
25.90B
-
55.59B
1.00M
8.99B
- 485000.0K
18.67B
March 31, 2022 at 6:00:00 AM
129.72B
27.17B
82.76B
15.80B
22.67B
11.4B
1.05B
- 244000.00K
- 2401000.00K
- 553000.00K
-
- 71000.00K
-
126.00M
- 498000.00K
33.00M
- 1715000.00K
11.50B
13.21B
1.15B
- 242000.00K
909.00M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
CNC
2023
2024
2025
2026
2027
$97.83
$101.20
$104.70
$108.31
$112.05